Alibaba acquires over 9% stake in US online retailer Zulily Inc
11 May 2015
Alibaba Group Holding Ltd has taken a stake of over 9 per cent in US online retailer Zulily Inc, a move that could raise questions about its plans in the US market.
The stake, valued at over $150 million, was disclosed in a securities filing that showed the company spent $56 million buying Zulily stock as the shares of the US company plunged last week following a disappointing earnings report.
Though its previous stake had not been revealed earlier. Zulily had listed Alibaba as a direct competitor.
The Seattle-based website sells clothing and other merchandise mostly aimed at moms and offers huge discounts in 'flash sales' that typically have time limits.
Alibaba was not looking to acquire Zulily outright, according to a person familiar with the matter. According to Zulily chief executive Darrell Cavens, his company had a lot of respect for Alibaba and welcomed it as a shareholder.
Alibaba was founded in 1999 and until its $25 billion IPO last year, was not known much outside China.
The company logged rapid growth by matching Chinese suppliers with buyers around the world and was now helping US companies reach consumers in China. The scale of its business and its financial resources had made it into a powerful global force.
According to commentators, while Alibaba clearly saw value in the stock, analysts had recently cited concerns about deteriorating fundamentals, with growth decelerated from 52 per cent in Q4 to 29 per cent in Q1, and deteriorating metrics, with net customer additions at 100,000 in Q1 of this year against 500,000 in the same quarter last year.